How To Avoid Debt Consolidation in Rochester, MN

Posted by Wesley Scott on February 10, 2020 at 2:36 PM
Wesley Scott

You read this correctly. Debt consolidation is a complete waste of time. There are numerous problems with debt consolidation. Let me count the problems.

First, when you do debt consolidation, you are walking billboard you are in financial distress. While it is noble to want to try and pay debt, you need to understand that when you seek this kind of relief you are broadcasting to future lenders you are in distress and they should not lend you money.

Second, who do you think eats first in debt consolidation, your creditors or you? Your creditors of course. Here is the thing—if you don’t pay creditors what they want, they will just garnish your wages and take more. And so if you have 12 creditors and 2 of them will not agree to the re-payment plan, you are screwed. Why? Because those two creditors will be garnishing your wages while you are trying to repay other creditors. It just will not work.

Third, any debt that maybe forgiven by creditors is taxable to you. If you have a 100k in debt and you only pay 20k back, you are required to pay taxes on 80k in debt. Now I understand that paying taxes on 80k is better than paying 80k but if you are in distress, will you have the ability to pay taxes on 80k? Not likely. So you get kicked when you are down. In bankruptcy, debt that is forgiven is not taxable to you.

Fourth, in debt consolidation, you may suffer for years with a payment that is atrocious. In bankruptcy, you don’t suffer at all. The debt is eliminated, tax free, and you move on with your life quicker.

CONCLUSION

When the time is right, or when you are ready, reach out to Rochester, Minnesota’s best bankruptcy law firm at www.kainscott.com. You will be so glad you did!

 

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